How Localized is the Pro-trade Effect of Immigration? Evidence from Mexico and the United States

I estimate the effect that immigrants have on international trade between states of current residence and states of origin. The pro-trade effect of immigrants has been thoroughly examined since the mid-1990s, connecting both destination countries with origin countries and destination sub-national divisions with origin countries, respectively. However, a recent emphasis on the importance of geographic proximity to the immigration-trade link leads me to pose the question of how localized the trade-enhancing effect of immigrants actually may be. In turn, my analysis provides the ?rst results as to the immigrant-trade nexus at the state level for both places of destination and origin, relying on a unique data set allowing the mapping of Mexican-born immigrants?US states of residence to Mexican states of origin. I ?nd that immigrants indeed promote trade between their US states of residence and Mexican states of origin, estimating a statistically signi?cant elasticity of exports to immigration equal to 0.08. This ?gure is not only qualitatively but also quantitatively important, corresponding to $2467 extra annual exports between respective US and Mexican states associated with each additional immigrant.